The UK regions hit hardest by business insolvencies amid rising costs and economic uncertainty

Businesses across the UK are battling unprecedented challenges in 2025. Economic uncertainty, soaring material costs, rising energy bills, and increased taxes are pushing companies to breaking point.

The hospitality and retail sectors, already stretched thin from post-pandemic recovery, are bearing the brunt of this financial squeeze as consumer spending tightens.

Now, a comprehensive new study has identified exactly which UK regions are being hit hardest by business insolvencies, revealing stark geographical differences in how companies are weathering the economic storm.

Helix Law, a specialist litigation firm known for handling complex commercial disputes, conducted the analysis to understand where business failures are clustering across Britain. The firm regularly works with companies facing financial distress and shareholder disputes, giving them unique insight into the warning signs of corporate collapse.

“We’re seeing increasing levels of commercial litigation as struggling companies and/or shareholders breach their agreements, by accident or design,” says Alex Cook, commercial and complex property litigation Partner at Helix Law. “The data shows this is a national problem with clear regional hotspots where companies are failing at alarming rates.”

Helix Law’s research team analysed government data on company insolvencies, business survival rates, and growth patterns to create a comprehensive picture of corporate distress across UK regions. Using 2024 insolvency estimates combined with active company counts, they developed a Business Insolvencies Impact Score, a benchmark that ranks regions from 0 to 100 based on how severely closures are affecting local economies. The methodology accounts for insolvency rates per 10,000 businesses, survival rates over five years, and growth trends since 2022.

London and the South East: Surprising numbers

Perhaps the biggest surprise in the data is the prevalence of insolvencies in London and the South East, with the highest number of business insolvencies across the country and also amongst the highest growth rate in insolvencies.

As a global financial centre the perception is that London and the South East of England are somewhat immune to the impact of financial pressures. This isn’t borne out by the data, showing over 5459 company failures in 2024, over 20% higher than the nearest region in second place; the North West.

“The number of companies in London and the South East perhaps makes it no surprise that there are a corresponding high number of corporate offices in the region also,” explains Cook. “Notwithstanding this, any perception that the South doesn’t face the same pressures is clearly wrong. We act in many commercial disputes in the Business and Property Court at the High Court in London and see first hand the volumes of cases; disputes and litigation taking place”.

North West: A perfect storm of business failures

The North West emerges as Britain’s insolvency hotspot with a staggering 4,034 estimated company failures in 2024 and an impact score of 78.80. While its insolvency rate of 151.57 per 10,000 businesses sits just below Yorkshire & Humber, the sheer volume of closures tells a different story.

“The North West combines high business density with some of the country’s worst survival rates,” explains Cook. “At just 36.10% over five years, companies there are struggling more than almost anywhere else to establish themselves long-term.”

The region’s 23.35% growth in insolvencies since 2022 reflects mounting pressure on businesses across Greater Manchester, Liverpool, and Lancashire. Traditional manufacturing areas are being hit particularly hard as global supply chain costs spiral.

Yorkshire & Humber: Highest insolvency rate despite growth

Yorkshire & Humber records the UK’s highest insolvency rate at 165.07 per 10,000 businesses, with 3,139 estimated failures pushing its impact score to 75.77. What makes this region stand out is its massive 35.22% surge in insolvencies since 2022 – the steepest climb in the top three.

“This dramatic spike suggests Yorkshire businesses are facing a sudden shock rather than a gradual decline,” notes Cook. “The region’s five-year survival rate of 41.04% is actually better than the North West, but something has clearly shifted in the last two years.”

Cities like Leeds, Sheffield, and Hull are seeing established businesses buckle under pressure, particularly in sectors dependent on consumer spending and commercial property.

West Midlands: Manufacturing hub under pressure

The West Midlands rounds out the top three with 2,377 estimated insolvencies and a 72.70 impact score. Its insolvency rate of 109.98 per 10,000 businesses may be lower than its northern counterparts, but the region faces a different challenge.

“The West Midlands has the worst five-year survival rate in our top ten at just 34.66%,” says Cook. “This suggests structural problems that go beyond the current economic squeeze. Businesses there have been struggling to establish themselves for years.”

Birmingham and Coventry’s automotive supply chains are feeling the pinch from both domestic cost pressures and international competition, contributing to the region’s 23.20% growth in insolvencies since 2022.

Alex Cook, Commercial and Property Litigation Solicitor at Helix Law, said, “The regions topping our list have weak survival rates and sharp insolvency spikes.

“With growth more challenging in the South East post-pandemic we saw investment flowing North, following promises of greater yields and return on investment. Many of these investments ended in litigation in one form or another, when either returns did not materialise as promised, or something else went wrong.

“Closures indicated in this data go beyond just one factor. Aside from misselling cases, interest rates have made borrowing expensive just when companies need cash flow support. Inflation has pushed the cost of everything up, from wages to materials, while energy costs remain stubbornly high. Add increased corporation tax and business rates, and you have a toxic mix that’s proving fatal for thousands of companies.

“If companies or individuals are unpaid or are owed money that’s outstanding, the best advice is to obtain professional advice from litigation experts to assess your position and best next steps to try to avoid the worst potential outcomes.”